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Is Nominative Fair Use of Domain Names OK For a Business That Is Related to a Brand?

Many of you are familiar with the topic of nominative fair use in domain names. This can often occur when a non-commercial use is made of a mark such as:

com for a fan site, or

com for a criticism site.

Similarly, commercial, for-profit uses of a trademark can be made where one is selling genuine branded parts or accessories for a product. An example of this, okidataparts.com, resulted in the four-step Oki Data test for dealers and distributors who set up websites to sell such items (see my August 2016 blog post Rethinking The Oki Data Fair Use Test).

In this post, I’d like to talk about the nominative fair use concept as it affects a different type of commercial trademark enterprise. In particular, one that isn’t used to sell the actual products of a brand owner but rather, a service that is arguably related to the brand owner.

Nominative Fair Use By an Activist Shareholder?

A recent article noted that the leader of a hedge fund holding share in General Motors created the domain UnlockGMValue.com and uses it to host a website encouraging other shareholders to vote in favor of the hedge fund’s proposal regarding a split in GM’s stock.

The site is not selling anything and there are no advertisements but it does contain a link with instructions on how to vote on this issue.

One might be tempted to put this into the category of political speech or social commentary but a good case can be made that it is, at its heart, a commercial site created to promote the commercial interests of the hedge fund.

I’m not aware of any formal nominal fair use dispute having been filed against this domain name but it should be interesting to watch the matter.

Does This Law Firm Have A Nominative Fair Use Leg to Stand On?

Of course, there have actually been formal UDRP disputes filed against other domain names that don’t fit the traditional mold. One of these is where a law firm creates a domain seeking to inform potential class action participants of a particular lawsuit in which they might be able to participate.

The website that resulted from these promoted the services of a law firm and displayed phrases such as:

“Diamond Overgrading”,

“DIAMOND DOCTOR”,

“You May Be Entitled To Significant Compensation”.

The site also included a link titled “Start a Claim”, which took the user to a page offering a free case evaluation.

The respondent law firm argued that it was only making a nominative fair use of the trademark and that the public would not be confused due to inclusion of the words “law suit” and “class action” in the domain names.

The majority of a split Panel first addressed this latter point saying that the terms “lawsuit” and “class action” are not necessarily negative expressions and thus don’t clearly avoid confusion with the Complainant’s trademark.

However the dissenting Panelist found that it “strains common sense” to conclude that anyone would be confused into believing that these domains are actually owned or approved of by the trademark owner.

Next, the Panel addressed the issue of whether the respondent has any rights or legitimate interests in the domain names.

The Respondent argued that the use of the trademark in these domain names only serves to make that use readily identifiable to consumers. In other words, it relied on an argument of nominative fair use of the DIAMOND DOCTOR mark.

However, the Panel majority disagreed saying “the resolving websites exist for commercial gain insofar as their mixed, if not principal, purpose is the solicitation of professional services, but with – in quantitative terms – incidental reference to Complainant’s business.”

It concluded that the Respondent could have just as easily communicated its message by using generic expressions in its domains such as:

“diamondvaluation” or

“diamondovergrading”

As before, the dissenting Panelist disagreed concluding, “Respondent does not intend to obtain a commercial gain by misleadingly diverting consumers” and noting that the parties are not competitors in the diamond business.

As a result of this 2-1 Panel split, the domains were ordered to be transferred to the Complainant.

I have not found news of any subsequent court action by the Respondent but, surprisingly, the domains remain in the name of the Respondent and continue to resolve to the same website. I can only conclude that either a court case is pending, the parties have reached some type of settlement, or that the Complainant (or its counsel) has simply failed to follow-through with the transfers after this decision.

In any event, the fact that the Panel was split in this case shows that such commercial uses of a trademark by a domain owner are still highly contentious.

Continued Defensive Vigilance Is Needed

The takeaway from situations like these nominative fair uses cases are that brand owners should consider adding, to their defensive domain portfolios, names that include such solicitation words as “law suit”, “class action”, and perhaps words relating to shareholder activism.

This is an inexact science, at best, but in that regard it’s no different than other defensive registration strategies. Consulting with a domain name expert is the best way to make the right choices and minimize a company’s risk of having to file UDRP or other legal cases against these types of commercial domain

It can be difficult tackling domain name and social media infringement without the right expertise. Steve covers UDRP cases, URS cases, and all other acronyms and topics related to cybersquatting and usersquatting.